Sales of a product was estimated at 80,000 pieces annually with a rate of 6 pu. Its variable mfg. costs are 2.50 pu with S&D and general expenses related to product is 59,000 on annual basis. Its fixed manufacturing costs (excluding depreciation) at 45,000 on annual basis.

Investment made is 350,000 with related to various molds & equipment. The equipment have a 3 year life with ending salvage value of 20,000.Taxat 40%.

Required:

a. Estimated increase in annual level of net income from the planned manufacture and sale of the product.

b. Annual net cash flows which was expected from the project

2.

A company has a practice of using absorption costing. Certain period in a quarter budgeted fixed overheads were 4,20,000, budgeted production was 30,000 units, fixed overhead cost was over absorbed by 16,000 and fixed overhead expenditure variance was at 30,000 (F).

Find out the actual production.

3.

Xeta Inc., sells a box for $15 each. The box have a variable cost of $4 per unit, and the products' fixed operating costs are at $220,000 per year. The company's capital structure includes 55% debt and 45% equity. Annual interest expense is $25,000, and the corporate tax rate is 35%.

1.Calculate the break-even point in units.

2.If it sells 25,000 units, calculate the firm's EBIT and net income.